Global Universal Banks: Deutsche Bank - Essay Example

? GLOBAL UNIVERSAL BANKS By Location Introduction Universal banking is becoming a common phenomenon in the banking industry lately. Contrary to other banks, universal banks extend their services beyond the usual loan provisions, and a regular check of savings accounts. Universal banks also provide clients with investment opportunities. Many universal banks have outlined a diverse range of services to individual clients, groups,countries and multinational organizations.The Deutsche universal bank is both global and universal, a factor made evident by its presence in over 70 countries. The Deutsche bank holds a record for being the only bank that has strived to achieve omnipresence. Evidently, universal banks exhibit multiple benefits to the clients, but a closer analysis reveals that they have certain disadvantages. This paper will highlight the advantages and disadvantages of universal banks. Moreover, the paper will analyse the issues that arise when handling tasks in the compliance department. Advantages of Universal Banks Universal banks offer their clients a diverse range of services to different clients having the opportunity to receive personalized services that conform to their banking needs. Usually individuals, groups, organizations, states and multi-national organizations exhibit varying financial needs. The fact that universal banks have the capacity to offer tailor-made services, they surpass other banks by offering each client service that conforms to personal financial needs. This is the reason why universal banks offer a high level of convenience to the clients (Heller, Meaney & Murphy 2001, p. 78). They serve as a single-stop banks where one can access all the required financial needs. Evidently, such convenience receives emphasis from the presence of most universal banks in different regions, affording the clients an increased banking flexibility even beyond the borders. Recent research reveals that universal banks serve as critical contributors to the economy. This is because they have the capacity to support a diverse range of investments in different parts of the globe. Universal banks exert their effect on the entire economic system, altering the economic trends by providing financial breakthroughtwo different types of clients. Universal banks serve private household clients, offering arrange of appealing service packages appropriate for them (Palepu2007, p. 87). Moreover, universal banks offer a range of services to institutional clients empowering them to receive the required the financial boost to achieve their goals. This factor has served as a reliable solution to the financial problems of many institutions as they can form investment partnerships with universal banks. These services are offered at a relatively lowered funding cost compared to other banks. Evidently, universal banks register a low level of profiling costs, placing them in a better position to offer services at the lower funding cost compared to other banks. Moreover, these banks exhibit a lower funding cost themselves, explaining further why they favour all types of clients. Universal banks have served to increase the willingness of credit borrowers, a factor that has contributed to the rising returns for clients who wish to save. This has been especially advantageous to governments that exhibit financial needs that require borrowing. Moreover, this proves to be highly beneficial to other clients, and contributes to a surging growth. This has given rise to an evident rise instability of the economies by causing as the spread of innovations in different regions in the globe (PadoanBrenton & Boyd 2003, p. 34). Disadvantages Although universal banks exhibit all these benefits, they face a surging pressure to satisfy all the clients in different regions.These banks face the compulsion of maintaining a high quality of their services (Lambert&Ioma2005, p.98). They have to ensure that they are responsive; clear in communication, prompt, and a high level of integrity in offering services to different clients with varying needs. Moreover, they have to indulge in extensive research in a bid to assess the needs of different clients in different locations. It is evident that the customers of universal banks are from different backgrounds and exhibit a high level of diversity. Other researchers have highlighted that universal banks face challenges in forming merger organizations with other developmental and financial institutions. The terms and conditions of these mergers are often complicated, but the banks have to deliver and satisfy the surging customer needs. Issues in the Compliance Department The compliance department handles issues related to organizational ethics and identification of solutions of regulating the operations of the organization. Moreover, the compliance department has the responsibility of the organization’s integrity and reputation. Other responsibilities entail the promotion of partnership formation with different businesses, ensuring that a compliance culture exists (Gup 2003, p.123). In extreme cases, the compliance department may choose to take stringent measures if the employees and affiliates of the organization do not the stipulated ethical principles. This department is of critical importance because the reputation of the organization depends on its competence. Working in the compliance department in a universal bank may give rise to certain unique issues that are not common trends in other businesses. Global banks are present in different locations, a factor that places them in a disadvantageous position of dealing with myriads of numerous local laws, diverse regulations, multiple supervisory authorities, diverse languages, varying time zones (Benston & Rosenfel 2010, P.67).Within such a complex setting and multiple scales of standards to satisfy, the compliance department faces numerous challenges. Operating on such a diverse environment, the compliance department of universal banks faces an immense challenge. With the department’s responsibility of maintaining quality control in the organization becomes challenging. Failure to meet the compliance expectations registering cases of non-compliance may be a leading cause for the loss of the core clients of the business. This can prove highly detrimental to the business of the universal bank (Biegelman & Biegelman 2008, p. 56). Such an occurrence has the potential of distracting the management team, and compelling it to focus on rebuilding the lost partnerships. Such an occurrence is a leading factorthat may contribute to the dwindling sales of the stock market. However, despite these probable issues, the compliance department must uphold its responsibilities of ensuring that the organization withholds the stipulated ethical principles in all the regions, and in accordance to the various laws governing the organizational operations. In cases of high compliance, issues are minimal. Conclusion As described above, universal banks present multiple benefits to different clients. They exhibit the potential of offering a diverse range of services to individual clients, groups, and governments. Such banks prove convenient to many clients in different regions of the globe. The Deutsche bank is one of the leading universal banks that have spread to over 70 countries. The compliance department is of critical importance to the organization as it ensures that the ethical conduct and quality are withheld. Bibliography Benston, GJ & Rosenfeld, J 2010, The selected works of George J. Benston, Oxford, Oxford University Press. Biegelman, MT&Biegelman, DR 2008, Building a world-class compliance program best practices and strategies for success, Hoboken, N.J., John Wiley & Sons. http://www.books24x7.com/marc.asp?bookid=24339. Gup, BE 2003,The future of banking. Westport (Conn.), Quorum Books. Heller, JC Meaney, ME& Murphy, JE 2001, Succeeding in compliance: a guide to professional development, Gaithersburg, MD, Aspen Publishers. Lambert, VM&Ioma, 2005,Payroll a Guide to Running an Efficient Department, Hoboken, John Wiley & Sons.http://public.eblib.com/EBLPublic/PublicView.do?ptiID=226594. Padoan, PC Brenton, P& Boyd, G 2003, The structural foundations of international finance: problems of growth and stability, Northampton, MA, Edward Elgar Publishing. Palepu, KG 2007, Business analysis and valuation: IFRS edition, text only, London, Thomson Learning. Read More